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Covid-19: Chancellor offers further financial support to SMEs

Government ramping up support for firms struggling with cash flow problems amid the growing impact of coronavirus

The Chancellor of the Exchequer has followed up on measures set out in last week’s Budget to help small businesses through the Covid-19 outbreak with further support to help keep cash flowing.

In his first Budget, chancellor Rishi Sunak outlined plans to give small and medium-sized enterprises (SMEs) access to a temporary coronavirus interruption loan scheme with the option to ask for up to £1.2m. That figure is being raised to £5m. He also said no interest would be charged on the first six months of any loans accessed through the scheme.

Another scheme is being launched by the Bank of England for larger firms, giving them access to loans that will help with cash flow. The plan is to have that set up and ready to go in a matter of days.

Sunak signalled that the government had earmarked an initial £330bn of guarantees to back the loans, equivalent to 15% of GDP, and it would be prepared to go further in the next few weeks if it needed to.

The Budget saw some steps taken to provide rate relief for businesses, but because of the ongoing crisis, Sunak said he would go further and all retailers would now be given a 100% business rates holiday for the next 12 months across England. He also revealed that the government would be increasing grants to small businesses eligible for Small Business Rate Relief from £3,000 to £10,000.

The government is including new legal powers in the Covid Bill, which will enable it to offer whatever further financial support it believes businesses require.

“We will do whatever it takes to protect our people and businesses from the effects of this global economic emergency brought on by the coronavirus pandemic”
Rishi Sunak, Chancellor of the Exchequer

“We will do whatever it takes to protect our people and businesses from the effects of this global economic emergency brought on by the coronavirus pandemic,” said Sunak. “The interventions I am setting out today will help support businesses of all sizes – so they can continue operating during these unprecedented times.”

So far, the channel has remained stoical in the face of the coronavirus, with recent results from Computacenter and Softcat indicating that the market had been in a strong position before the virus started to ramp up.

The concern has always been that firms could struggle to survive if customers are staying away and putting a halt to tech investments. There has already been an indication of the pressure retailers are feeling with the decision yesterday by Carphone Warehouse to close all 531 of its standalone mobile shops.

“Customers are changing how they buy technology, and Dixons Carphone must change with them. We’re under way with a fundamental transformation to do so,” said Alex Baldock, group chief executive of Dixons Carphone.

Clearly, with unsustainable losses of £90m expected this year, mobile is currently holding back the whole business. There’s never an easy time for an announcement like this, but the turbulent times ahead only underline the importance of acting now,” he added.

“We remain committed to mobile, as we’re showing by developing a new offer for customers, retaining as many Carphone Warehouse colleagues as we can, and making mobile a core category in our big stores and online. As such, mobile will be part of the one, joined-up business that customers want, and that’s essential for our transformation,” said Baldock.

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